Sprint shares were down 27 cents during mid-day trading on Friday amid industry rumors that a stockholder wants to sit on the company’s board and that CEO Gary Forsee could be on his way out.
Relational Investors LLC owns about 1.9 percent of Sprint’s shares and has stated its concern this week about Sprint’s management strategy. Primarily, Relational Investors is unhappy with Sprint’s WiMAX deployment and lack of focus on core wireless operations.
That comes as media reports abound that the Sprint board wants a new CEO by December. The Wall Street Journal said a search for Forsee’s replacement already is under way.
Sprint isn’t commenting.
Despite all of that, Standard & Poor’s Ratings Services on Friday didn’t change its outlook on Sprint. That was because Relational Investors hasn’t suggested aggressive financial changes; instead, the shareholder was pushing for operational changes, said S&P. The ratings service is concerned about Sprint’s WiMAX investment, though, for the risk of losing a substantial amount of money. So, S&P is leaving room to downgrade its credit rating for Sprint.
Since Sprint acquired Nextel two years ago, it has been riddled with integration and customer service problems, causing increasing investor displeasure. A number of Sprint customers have poor credit and have stopped paying their bills as they have trouble paying mortgages during the subprime bust, according to The Journal.
Sprint Nextel www.sprint.com
Standard & Poor’s www.standardandpoors.com
